New projects in focus in Hong Kong amid mortgage curbs

Buyers stay away from second-hand flats after the HKMA further tightens credit policies

PUBLISHED : Wednesday, 18 March, 2015, 6:00am
UPDATED : Wednesday, 18 March, 2015, 6:00am

Sales in the primary residential market remain positive as potential buyers increasingly shift away from the secondary sector after the Hong Kong Monetary Authority further tightened mortgage lending policies.

Over the weekend, 120 units were sold in the primary market, with most attention still focused on La Lumiere, a project in Hung Hom built by Cheung Kong (Holdings). Seventy-six flats have been bought, raising the number sold since its launch on March 7 to 184.

At the same time, New World Development sold 19 flats at The Pavilia Hill, its luxury residential project in North Point, for HK$25 million to HK$70 million each. The developer has offered 46 units at the project for sale on the weekend.

"The sales outcome for new projects was satisfactory," said Louis Chan Wing-kit, a managing director at Centaline Property Agency. "That indicates the tougher mortgage rules have had a bigger impact on small flats or those worth less than HK$7 million."

Although some units at La Lumiere cost less than HK$7 million, Chan said buyers still proceeded with the purchases because developers would provide second mortgage loans to drum up sales.

"But from what I heard, buyers who are applying for second mortgages are not in big numbers," he said. "Most buyers have the financial ability to come up with higher down payments under the new rule."

The HKMA lowered the loan-value ratio for properties worth less than HK$7 million on February 27.

Chan said home sales would continue to be dominated by the primary sector, with the number of transactions in the secondary market having halved.

He expected sales volume to be subdued this coming weekend because no major new projects were being launched.

Cheung Kong said earlier that it would release another big project, Hemera, atop the Lohas Park MTR station in Tseung Kwan O, shortly.

The project comprises 1,648 units with three to four bedrooms each.

Cheung Kong executive director Justin Chiu Kwok-hung said the sales brochure for Hemera had been posted on the company website to give potential buyers more time to study the project.

Hemera would be the next new project put on sale after La Lumiere, he said.

Home sales in the secondary market have been hit hard by the credit tightening.

Data from Ricacorp Properties shows that during the week to March 15, 100 second-hand flats were sold in the 50 largest private housing estates it monitors, compared with 166 before the introduction of the tougher mortgage rule. Ten of the 50 estates recorded zero transactions last week.